Manmade Fibre Industry Disappointed After Government Hikes MEIS By 2 Per Cent

Trade & Policy

Manmade Fibre Industry Disappointed After Government Hikes MEIS By 2 Per Cent

The government hiked Merchandise Exports from India Scheme (MEIS) by 2 per cent on all exportable goods including textile products disappointing the manmade fibre sector, after it announced its mid-term review of Foreign Trade Policy for 2015-20 recently.

Expressing his disappointment, Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) Chairman Sri Narain Agarwal said that although the mid-term review had addressed a host of the issues from GST to ‘Ease of Trading’ across borders, it has grossly overlooked the manmade fibre sector of the country which is reeling under GST due to asymmetrical input taxes and inverted duty structure, as well as facing fierce competition in overseas markets.

He said that SRTEPC had sent various representations to the Ministry of Textiles and Ministry of Commerce and Industry, with a request to hike MEIS rates on all fabrics, made-ups and yarns of manmade fibres. Recently, it had sent a list of 167 MMF items in these categories to the Ministry of Commerce and Industry requesting to increase the MEIS rates, he said.

However, the mid-term policy review covered only seven fabrics and four made-up items which is a total disappointment for the manmade fibre textile segment of the country. According to the review statement to increase 2 per cent MEIS rates across the board for labour intensive MSME sectors leading to additional annual incentive of Rs 4,567 crore, the Council expects that the Government may shortly come out with another list of items with revised MEIS rates, Aggarwal said.

On the contrary, The Cotton Textiles Export Promotion Council (Texprocil) Chairman Ujwal Lahoti expressed satisfaction with the changes and said, “The Mid Term Review of Foreign Trade is progressive and growth oriented. The government has recognised the urgent need to address the challenges being faced by the exporters on account of the roll out of the goods and services tax (GST) regime by focusing on reducing procedural burden”.

Earlier, MEIS rates for garments and made ups were increased from 2 per cent to 4 per cent. After the latest increase, MEIS has gone up to 6 per cent. The government also raised MEIS on cotton shopping bags to 5 per cent from the level of 3 per cent earlier.

Meanwhile, cotton textile exporters urged the government to include cotton yarn under MEIS and extend 3 per cent Interest Equalisation Scheme to merchant exporters. Exporters have also urged the government to cover fabrics under rebate of state levies (RoSL) and increase MEIS rates for fabrics to allow domestic procurements against Export Promotion Capital Goods (EPCG) Authorisations and Advance Authorisations without payment of GST for export production.

“Enhanced MEIS rates will provide the much needed relief to exporters and certainly have a positive impact on the overall exports especially of textile products,” Lahoti said.